PHMSA Worries About Pipeline Safety, Senate Bill Worries Pipeline Industry

By Stephen Barlas, Washington Editor | May 2009 Vol. 64 No. 5

Patricia Klinger, a deputy associate administrator for governmental, international and public affairs, says the workshop “shows we are very serious, and that there could be a serious problem especially with all the pipeline building expected over the next 10 years. The point we are trying to make is ‘let’s get it right now.’ ”

Terry Boss, INGAA senior vice president, explains that supply of pipe, construction materials, construction firms and quality control personnel have had a hard time keeping up with demand. “Everyone is stretched to the hilt,” he explains. As a result, a lot of new companies have gotten into the pipeline supply and construction business with some of them clearly not being ready to meet the higher safety requirements for 80 percent SMYS pipelines. This has resulted in defective pipe being supplied, poor welds and other problems which have turned up in PHMSA inspections.

Senate bill worries pipeline industry

The pipeline industry is worried about a new Senate bill which gives FERC wider latitude to award rebates to customers who the agency finds have been subject to unfair rates. The Natural Gas and Electricity Review and Enforcement Act (S. 672) by Sen. Maria Cantwell (D WA) would allow FERC to force pipelines to give up the same kind of rebates which are now required of electric utilities under the Federal Power Act. Cantwell is chairman of the Senate Energy and Natural Resources energy subcommittee. Her legislation is likely to be included in the broad energy bill that committee is now putting together. The House Energy & Commerce Committee is writing its own omnibus bill. No House member has yet introduced a version of the Cantwell bill.

The anti pipeline legislation is being pushed by the American Public Gas Association which corralled 19 other trade associations, consumer advocacy groups and joint action agencies into signing a letter to Senate and House leaders on April 6. The coalition cited a recent report from the Natural Gas Supply Association that shows that from 2003 2007 pipelines earned roughly $3.7 billion more than they would have collected on an average 12 percent return on equity. The data for the report analyzed the cost recovery of 32 major pipelines (80 percent of the market) based on financial data that they are required to file annually with the FERC. The study also shows that seven of the 32 pipelines earned on average equity returns in excess of 20 percent. “These excess returns rightfully belong in consumers’ pockets,” said Bert Kalisch, president & CEO of the American Public Gas Association (APGA).